GUATEMALA: All eyes on a crowded field
Guatemala. Elections and expectations for the new presidency will be the main focus in Guatemala this year.The first round of voting, which could include as many as 24 candidates, is set for June 16th. If no candidate wins 50% of the vote, plus 1 vote more, there’ll a runoff on August 11th. The new president is to take office January 14th, 2020.
Our forecast was conducted under the assumption of no major changes in economic policy, especially in the new administration. We expect the economy to unfold without surprises: that is, we expect moderate growth, inflation within target range, a positive current account (as private remittances exceed the goods and services deficit), and relative stability in both the FX market and net international reserves. The fiscal deficit will be higher, and the debt-GDP ratio will rise moderately, though its level is still conservative.
Yet external and internal factors could change this outlook. There’s tension between the current administration and donor countries, including with the United States, over President Jimmy Morales’ decision to end the CICIG agreement, and issues of how the new administration will approach economic policy.We’ll revise our outlook in August, after the election results are in.
El Salvador continues to transition to a new presidency that will take office in June, with a continued dearth of public information, or statements on key topics, such as public policy plans, main economic issues and cabinet choices. President-elect Nayib Bukele has been active in international relations, through meetings with representatives of several countries, and short visits to Mexico and the United States. Some of Bukele’s messages suggest that his orientation is not particularly leftist. The economy continues the slow-growth trend of recent years, and continues to rely upon foreign remittances, with a rising fiscal deficit, and few expectations for the short-term economic outlook.
In Costa Rica, the government’s proposal to place $6 billion in Eurobonds over five years ($1.5 billion in 2019 and 2020, and $1 billion per year in 2021-2023) continues to struggle for approval in Congress.To become law, the proposal needs a two-thirds vote in the Assembly, or 38 votes. There seems to be agreement that Costa Rica needs to go to the Eurobond market this year, to complement funds to cover the public deficit, and to amortize maturing debt.The main area of disagreement is over the appropriateness of approving a law that authorizes the issues up to 2023.
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